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Definition by Holland : law is a rule of external human action enforced by the sovereign political authority 3 essential characteristics 1) Rules relating to the actions. 2) Attempts to regulate actions. 3) Enforced by the state.
Definition by salmond: law is a body of recognized and applied by the state in administration of justice. Features: law is not static. Law are changed or developed to fit the requests of people in the society. Need for the knowledge of law: 1) Ignorantia juris not excus at means ignorance of law is no excuse. 2) For the student of business management every business transaction has legal implications. Meaning: (business law or commercial law or mercantile law), law relating to trade, industry and commerce. Features: 1) Rights and obligations arising out of a business organization. 2) Scope is fairly large and no line of demarcation between business law and others branches. 3) The contract law is applicable not only to business people but also to all other persons. 4) No difference in procedure do not form comprehensive code dealing will all aspects of business activities
It is divided into 2 broad needs 1) general principal of contract [ section 1 to 75 ] 2) specific kind of contract [ section 124 to 238 ] 3) no sections between 75 & 124
Q.4 All contract are agreements but all agreements are not contract Give reason.
Ans- proposal-sec 2 (a):- when one person signifies to another, his willingness to do or to abstain from doing anything with a view to obtain the assent of that other to such act or abstinence he said to make a proposal. Acceptance-sec 2 (b):- when the person to whom the proposal is made signifies his assent there for the proposal is said to be accepted a proposal when accepted, become a promise.
Sec 2 (c):- the person making a proposal called the promisor & the person accepting the proposal is called the promisee Agreement sec 2 (e):- every promise and every set of promises forming the consideration for each others is an agreement. Sec 2 (h): - An agreement becomes a contract when it is enforceable by law. Sec 2 (g) :- an agreement not enforceable by law is said to be void. Proposal- acceptance-promise-agreement-contract. Hence, all contracts are agreements but all agreements are not contracts.
Sec. 5: When a proposal or acceptance may be revoked. A proposal may be revoked at any time before the communication of acceptance is complete as against the proposal but not afterwards. An acceptance may be revoked at any time before the communication of acceptance is completed as against the acceptor but not afterwards. Sec 6: How a proposal can be revoked. 1 2 3 4 By the communication of notice of revocation By the lapse of time prescribed in such proposal fore its acceptance. By the failure of the acceptor to fulfill a condition precedent to acceptance. By the death or insanity of the proposer if the fact come to the knowledge of the acceptor before accepting.
IV. Does or abstains from doing. Consideration may consist either or some act which the promisee does, or of some omission or for bearance on the part of the promisee or any other person. Pollock defines consideration as the price for which the Definition by pollock: promise of the other is bought and the promise thus given for value is enforceable.
Consideration is a important requisite or contract. There as 2 clearly separable part the promise on one hand and the consideration for the promise on the other hand. Sec.2 (e) -Every promise and every set of promises forming the consideration for each other is an agreement.
Sec. 2 (f) - Promises which from consideration or part of the consideration for each other is called reciprocal promises. Consideration is a necessity to the validity of a contract. Law insist on the existence of consideration. Ex nudo pacto non oritur actio : Law will not enforce a promise given for nothing out of nacked pact. No cause of action arises. Consideration need not to adequate. Anson: Court does not sit to make bargains for the parties, although the act must be done for some consideration for some value.
Q.9 Points of difference between English and Indian law as regards consideration:
1 English law, a contract under seal (registered) is binding without consideration Indian Law has not such distinction. Consideration is a must. English law, consideration must move from promisee only. Indian law, it may move from promisee or any other person. English law, consideration need not be adequate but must have some value Indian law as per Sec. 25 natural love and affection is a good consideration. English law, consideration may be present or future. Indian law past consideration future. Indian law past consideration supports the subsequent promise.
Ingredients of a valid contract: 1) Free consent Sec. 13 = 22 2) Competency of the Parties Sec. 11 & 12 3) Lawful consideration and object Sec. 23 = 25
4)
All these ingredients must be present for a valid contract. They must co-exist with each other. They must be conjunctive and not disjunctive. Competency of the parties Sec. 11 & 12: All the parties must be competent to contract Sec. 11: Every person is competent to contract who is: 1. Of the age of majority 2. Who is of round mind, and 3. Is not disqualified from contracting.
5. Mistake 1. COERCION Sec 15: Coercion is committing, or threatening to comorit any act forbidden by the Indian Penal Code, or the unlawful detaining or threatening to detain any property to the prejudice of any person whatsoever, which the intention of causing any person to enter into an agreement. 2. UNDUE INFUENCE Sec 16: Sec 16 (1) undue influence as A Contract is said to be induced by undue influence where the relations subsisting between the parties are such that one of the parties is in position to dominate the will of the other and uses the position to obtain an unfair advantage over the other. Sec 16 (2): A person is deemed to be in a position to dominate the will of another: 1. Where he holds a real or apparent authority over the other of 2. Where he stands in a fiduciary authority over the other or 3. Where he makes a contract with a person whose mental capacity is affected. 3. FRAUD Sec 17: Sec 17 defines fraud as fraud means and includes any of the following acts committed by (i) a party to a contract or (ii) with his connivance or (iii) by his agent, with intent to deceive another party, or to induce him to enter into the contract. 1) A false statement intertially made is a fraud. 2) Active concealment of a fact by one having a knowledge or belief of the facts: 3) A Promise made without any intention of performing it. 4) Any other act done to deceive. 5) Any other act or omission as the law specially declared to be fraudulent. 4. MIS REPRESENTATION Sec 18: Consent given under misrepresentation of facts is no consent at all. ACC to Sec 18, Misrepresentation means and includes: 1. Positive assertions in a manner not warranted by the act of the person making it. 2. Any breach of duty which without an intent to deceive, gains an advertisement to the person committing it by misleading another to his prejudice or any one claiming under him. 3. Causing however innocently another party to make a mistake as to the substance of a subject matter of the agreement.
1. Mistake of facts Sec 20. 2. Mistake of Law Sec 21 Mistake of facts: Where both the parties to an agreement are under a mistake as to a matter of fact essential to an agreement, the agreement is void. 1. Bilateral Mistake: Bilateral or mutual mistake as to an existing fact essential to the agreement tenders the agreement void. Under bilateral mistake, both parties are under a mistake as to a matter of fact. 2. Unilateral Mistake: A contract is not voidable merely because it was caused by one of the parties to it being under a mistake as to a matter of fact (Sec 22 ) In unilateral mistake only one party is under a mistake as to matter of fact., the agreement is not rendered to be void. 3. Mistake as to identity of a person: Generally, mistake arises as to the identity of a person. Identity of a person will render a contractvoidable where such identity is essential to the contract. If the identity of the person is immaterial, mistake will not avoid a contract, Mistake as to subject matter: when both the parties believe in existence of certain state of thing as a subject matter, which is reality do not exist, the contract shall be held to be void. 4. Mistake of law: They are of 2 types (Sec 21) Sec 21 of the act provides that a contract is not voidable because it is caused by a mistake as to any law in force in India, but a mistake as to a law not in force in India has the same effect as a mistake of fact.
Mistake of law in force in India: Mistake on a point of Indian Law does not affect the contract. Mistake of law not enforce in India: In treated as a mistake of fact.
Sec 24: If the consideration or object of an agreement is lawful (Partly) and partly under lawful and the lawful and unlawful portions are inseparable, then the entire agreement is void. Sec 25: Agreement without consideration: Consideration is essential for a validity of a contract nudum pactum (a nacked pact) is unenforceable.
Q.14 Sec 25 lays down the exceptional cases where a contract is enforceable even though there is no consideration.
1. Sec 25 (1) States : An agreement made without consideration is void unless it is expressed in writing and registered under the law for the time being in force for the registration of documents and is made on account of natural love and affection between the parties standing in near relation to each other. 2. Sec 25 (2) States : An agreement without a consideration is void unless it is promise to compensate a person who has already and voluntarily done something for the promised or something which the promisor was legally complellable to do. 3. Sec 25 (3) States : An agreement made without consideration is void unless it is promise made in writing and signed by the debtor or his agent to pay wholly or in part, the time bared debt by the law of timitation
A debt bared by law of limitation cannot be recovered unless it is written and signed promise by the debt or his agent making it enforceable without any fresh consideration.
Service agreements. 3. Agreement in restraint of legal proceedings Sec 28 : Any agreement which prohibits a person from initiating the judicial proceedings in respect of any right is void to that extent Exceptions. Agreements to refer future disputes to the arbitrations. Agreements to refer pending disputes to the arbitrations. 4. Uncertain agreements Sec 29: An agreement meaning of which is not certain or not capable of being made certain, are void agreements. 5. Agreements by the way of wager Sec 30 : Such agreements are void. A wager is an agreement by which money is payable by one person to another on the happening or non happening of a future uncertain event such as gambling, gaming or wagering. One looses and the other wins, upon a future uncertain event. No suit can be brought for recovering any thing alleged to be won or any wagery. 6. Agreements to do an impossible act Sec 56 : An agreement to do an impossible act in itself is void.
1. By whom contracts must be performed? The parties to a contract must either perform at offer to perform their respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or of any other Law. (Sec 37) Persons who should perform the Promise: 1) In case of a personal contract by the promisor personally. 2) In case of Non Personal contracts: by the promisor personally. By the third person on behalf of promisor. In the event of the death of promisor by his legal representatives. 3) In case of joint promisors- by the promisors jointly or third person on behalf of the permisors or their legal representatives.
2. Time and place for performance: Where no time is specified, act must be performed within a reasonable time, when time is specified, the promisor may perform it may time during the usual hours of business on such day and at such place at such place at which the promise ought to be performed. The performance of any promise may be made in any manner or at any time which the promise prescribes or sanctions. Time as essence of the contract: where time is essential and the party fails to do any such this before the specified time, the contract becomes voidable at the option of the promises. Where time is nest essential, the contract does not become voidable, but the promisee is entitled to compensation for any loss suffered by him. Whether time is the essence of the contract or not depends on the intention of the parties or the terms of the contract. If the promises accepts performance at any time other than that agreed, the promises can claim compensation only if he has given notice of his intention to do so to the promisor. 3. Performance of reciprocal promises: Promises which form consideration or part of the consideration for each other is called reciprocal promises. Recirocal promises must be simultaneously performed. (Sec 51) If the order in which reciprocal promises are to be performed is specified, they shall be performed in the order. (Sec 52)
In case of dependent promises where one cannot be performed till the other is performed its performance cannot be claimed till the other has ben performed (Sec 54). When one party to a contract prevents the other from performing his promise the contract become voidable at the option of the party so prevented (Sec 53). Where persons reciprocally promise directly to do certain thing which are legal and 2ndly certain things which are illegal, the first set of promise is a contract, but the second set is a void agreement (Sec 57). 4. Performance of alternative promises: In the case of alternative promises, one branch of which is legal and the other illegal, the legal branch only can be enforced (Sec 58). Illustration: A & B agree that A shall pay and Rs. 1000 for which B shall after words deliver to A either rice at smuggled opt6ion. The contract is valid as to the delivery of rice and void as to the delivery of the opium.
5. Appropriation of Payments: Appropriation means application of payments. The rules of appropriation of payments are as under: 1. The debtor has a 1st right to intimate appropriation of a debt at the time of payment. The creditor, if he accepts, shall then apply the creditor, if he accept, shall then apply the payment accordingly. 2. If the debtor fails to exercise his right, the right than devolves on the creditor to appropriate the payment to any lawful debt through barred by the law of limitation. 3. If the creditor also fails to exercise his rights, the appropriation will be done in order of time. 4. In case of debts of equal standing each will be appropriated proportionately. The above rules of appropriation of payment would apply to separate and distinct debts and not where there is only one debt though payable in installments. 6. Modes of discharge of contract: Discharge of contract means termination of contract. By discharges, the rights and the obligations of the parties come to an end. The discharge of contract could be in any of the following ways. 1. By performance. 2. Death of promisor discharges the contract of the personal skill or ability.
3. Where one party refuses to accept the offer of performance the other party is discharged. 4. By breach of contract. Breach of contract may be actual breach or anticipatory breach.
1. Claim for necessaries supplied to a person incapable of contracting Sec. 68: If a person in capable of entering into a contract or any one who he is legally bound to support is supplied by another person with necessary suited to his condition in life, the person who has furnished such supplied, is entitled to be reimbursed from the property of such in capable person. Illustration: A supplies B a Lunatic with necessaries suitable to his condition in life. A is entitled to be reimbursed from Bs property. 2. Reimbursement of many paid in which he is interested (Sec 69) A person, who is interested in the payment of the money which another is bound to pay by law, and who therefore pays it, is entitled to be reimbursed by the other. Illustration: B hold land in Bengal, on a lease granted by A the reminder. The revenue payable by A to the Govt. being in arrear, his land is advertised for sale by the Govt. under the revenue law, the consequences o f such sale will be annulment of the Bs lease. B to prevent the sale B the consequent annulment of his own lease, pays the Govt. the sum due from a. A is bound to make good the B the amount paid so.
3. Obligations of person to pay for enjoying benefit of non gratuities act Sec. 70 Where a person lawfully does something for another or delivers anything to him, not intending to so graduating and such other person enjoys the benefit thereof, the later is bound to make compensation for the further. Illustration: A, a tradesman, leaves goods at Bs house by mistake, B treats the goods as his own. He is bound to pay A for them. 4. Responsibility of finder of goods (Sec. 71). An agreement is implied by law where a person finds goods belonging to another and takes them into his custodies, he is subject to the some responsibility as a bailee, its his responsibility to care of the goods and try to find out the true owner, he is entitled to its possession as against everyone except the true owner. 5. Payment or delivery of mistake or under coercion (Sec,72) A person whom money has been paid or anything delivered by mistake or under coercion must repay it or return it. E.g. A & B jointly owe Rs. 100 to C. A alone pay the amount to c and B not knowing this facts, pay Rs. 100 over again to C. C is bound to repay the amount to B. Further as per sec. 73 the rights and liabilities of partners to a quasi contract are the same as if they willingly? IN fact entered into such a contract.
Principle can not revoke the authority of an agency if: When the agency has exercised his authority fully or partially the principal can not revoke the acts already done. The agent has an interest in the subject matter of the contract, his authority can not be revoked so as to prejudice that interest.
By notice: Illustration: A guarantee to B to the extent of Rs. 10000/- that C shall pay all the bills that B shall draw upon him B draws upon C. C accepts the bill A gives notice of revocation C dishonors the bills on maturity. A is liable upon his guarantee. 3) By death of the surety (Sec 131) the death of the surety operates in the absence of the contract to the contrary as a revocation for future transaction. Estate of the surety is liable for all transactions interact into prior to his death. It is not necessary that creditor must have notice of surety death.
Q.23 TYPE OF PARTNERSHIP: 1. Partnership for a fixed term: The partners are free to fix the duration of the partnership where partners have agreed to carry on the business for a definite period of time, the partnership is said to be for a fixed period. It shall come to an end only after the expiry of the stipulated period. However, where the partners continue the business even after of the stated period, the partnership gets converted into partnership at will. 2. Partnership at will (Sec 7 & Sec 43). Where no provision is made by contract between the partners for the duration of their partnership, or for the determination of their partnership, the partnership is partnership at will. It has two characteristics. There is no provision in the contract between the partners for duration of the partnership. There is no provision in the contract for determination or termination of the partnership. This partnership has no fixed or definite date of termination and therefore, death or retirement of any of the partners does not affect the existence of partnership. 3. Particular Partnership (Sec 8). A person may become a partner with another person in particular adventure or undertakings (Sec 8). When two or more persons agree to do business in particular adventure or undertaking such partnership is called Particular Partnership.
lends loan to the firm on his behavior and it the firm is unable to pay, the 3rd party can recover the money from partner by Estoppel. Partner by Holding out: He is actually not a partner of the firm as he does not contribute any capital nor does he participate in the management of the firm. He is one who is declared as a partner though he does not positively expresses himself as a partner E.G When a person asks another person whether A is a partner in the firm and the other person neither says yes nor No, his silence is an indication that A is a partner and such a partner is known as partner by holding out. The liability of such a partner is unlimited.
The application form should be duly signed by all the partners. Along with this firm, the partners have to submit Partnership Deed, and if satisfied will be issued a certificate of Registration by the Registrar. Once the certificate is obtained, it means the firm is registered. Q.26 EFFECTS OF NON REGISTTRATION (Sec 69). 1. Suits between partners and firm: A partner of an unregistered firm cannot sue the firm or any partners of the firm to enforce a right arising from a contract or conferred by Partnership Act. 2. Suits between firm and third parties: An unregistered firm can not sue a third party to enforce a right arising from a contract until: 3. the firm is registered and 4. The name of the person suing appears as partner in the Register of Firm.
5. No right to counter claim or set-off: An unregistered firm or any partner thereof cannot counter claim or set-of in a proceeding instituted against the firm by a third party to enforce a right arising from a contract, until the registration of the firm is effected. Q.27 RIGHT OF THE PARTNER: 1. Right to take part in business: Every partner has a right to take part in the conduct and management of the business. (Sec 12 a) 2. Right to be consulted: Every partner has an inherent right to be consulted in all matters affecting the business or the partnership and express his views before any decision is taken by the partners. 3. Right to access to Accounts: Every partner has a right to have access to and inspect any copy any of the books of the firm. (Sec 12 d). 4. Right to share the profits: In the absence of any agreement, the partners are entitled to share equally in the profits earned and are liable to contribute equally to the losses sustained by the firm. 5. Right to indemnify: a partner has authority, in an emergency, to do all such acts for the purpose of protecting the firm from loss as would be done by a person of ordinary prudence, in his own case, acting under similar circumstances. Such acts of the partner bind the firm. If as a consequence of any such act, the partner incurs any liability or makes any payment, he has a right to be indemnified. 6. Right to interest on Capital: The partnership agreement may contain a clause as to the right of the partners to claim interest on capital at a certain rate. Such interest, subject to contract between the partners, is payable only out of profits, if any, earned by the firm. 7. Right to Interest on Advances: where a partner makes, for a purpose of the business of the firm, any advance beyond the amount of capital, he is entitled to interest. 8. Right to use of partnership properly: Subject to contract between the partners, the property of the firm shall be held and used by the partners exclusively for the purpose of the business of the firm. 9. No New Partner to be introduced: Every partner has to right to prevent introduction of a new partner unless to consent to that or unless there is an express term in the contract parenting such introduction. This is because partnership is found on mutual trust and confidence. 10. No liability before joining: A person who is introduced as a partner into a firm is not liable for any act of the firm done before he becomes a partner. 11. Right to retire: A partner has a right to retire (a) with the consent of all other partners, or (b) in accordance with an express agreement between the partners, or (c) where the partnership is at will, by giving a notice to all the other partners of his intention to retire. 12. Right of partner as Agent of the firm: Every partner for the purpose of the business of the firm is the agent of the firm.
His rights and liabilities continue to be those of a minor till the date of the notice. His share is not liable for any acts of the firm done after the date of the public notice. He is entitled to sue the partners for his share of the property and profits in the firm. [ Sec 30 (8) ]
Q.31 MODES OF DISSOLUTION: Dissolution of a firm may be brought about either by: Voluntary acts of the partner i.e. without interference of the court. ( Sec 40 42). Order of the court ( Sec 4). I. By Voluntary Acts of The Partners: A) By Agreement: (Sec 40) A firm may be dissolved: With the consent of all the partners, or In accordance with a contract between the partners. expressed or implied.
B) By Compulsory Dissolution: (Sec 41) By insolvency of all the partners except one, or By the business of partnership becoming illegal or unlawful by subsequent events. C) On the happening of certain contingencies (Sec 42): Subject to the contract between the partners under the foll circumstances, the firm is dissolved. If the firm is constituted for a fixed term, then by expiry of that term. However, the authority of the partners continues for the purpose of winding up. If the firm is constituted to carry out one or more adventures or undertaking, then by completion thereof. By the death of a partner. By insolvency of partner. D) By Notice: ( Sec 43). I) In case of partnership at will, the firm may to dissolved by any partner giving a notice to the other partners of his intention to dissolve the firm. But the notice must be in writing and unambiguous. Once given, it cannot be withdrawn, the firm is dissolved from the date mentioned in the notice, or if the date is not mentioned, from the date of the communication of the notice. II. By order of the Court (Sec 44) The essential element to be noted here is that only on the suit by a partner, the court will interfere and order the dissolution of the firm on any of the following grounds: That a partner has become of unsound mind. That a partner has become permanently incapable of performing his duties. That a partner is guilty of conduct which is likely to affect prejudicially, the carrying on of the business. That a partner persistently commits breach of agreement, for instance, a firm is dissolved when (i) a partner commits breach of trust, or (ii) takes away the partnership books, etc. That a partner has transferred his interest to a third party or allowed his share to be charged or sold in the recovery of arrears of land revenue. On any other ground which renders it just and equitable that he firm should be dissolved. That the business of the firm cannot be carried on, save at a loss.
Meaning and definition: The word company ordinarily means an association of a number of persons for some common purpose. Sec 3(i) (i) of the Companies Act 1956 defines a company as A company formed and registered under this act or an existing company. An existing company means a company formed and registered under any of the former Companies Act. But Heneys brief definition brings out clearly many of the characteristics of a company. He defines A Company is an incorporated association which is an artificial person created by law, having a separate legal entity with a perpetual succession and a common seal. Characteristics of a Company: 1. Registration: A Company is an in corporated association i.e. registration of a company is compulsory. All the companies whether private Ltd or public Ltd must get registered as per the provision of Indian Companies Act,1956 Registration is a must in a case of Limited company. 2. Separate legal entity: A company is a artificial person created by law. It enjoys separate legal status. It can by or sell any property and it can also enter into a contract like any other person. 3. Perpetual Succession: A company has a or enjoys continuity i.e. perpetual succession. Death insolvency and insanity or any change in its membership does not affect its continuity. It is said, Men come and go, but company goes for ever. 4. Limited Liability: The liability of the member of the company having share capital is limited to the extent of the nominal of share held by them. Shareholders can not be called upon to pay more than the unpaid value of his shares, whatever may be the level of indebtness of the company. In case of Guarantee Company the liability of members is limited to such amount or as the members may undertake to contributes to the assets of the company. 5. Common Seal: The company being an artificial person cannot sign its name on a contract. The common seal is used as a substitute for its signature. The common seal bears the name and place of the company and date of its incorporation engraved on it. 6. Separate Property: A company has every right to acquire as well as transfer the property in its own name, as it is a legal person. No shareholders has any legal or equitable interest in the property of the company. 7. Transfer of Shares: The shares of the company are freely transferable from one person to another except in case of private company. 8. Capacity to sue and be sued: As a legal person it can sue and be sued in its own name.
E) On the Basis of ownership: 1. Government Company: Ref. (Sec 617): A Govt. Company means any company is which not less than 51 % of the paid up share capital is hold by the Central Government or by any State Government or Governments, or partly by one or more State Governments and includes a company which is a subsidiary of a Government Company.
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Emblems & Names Act, 1950 and which is not identical with or does not closely resemble the name of the company already registered. Preparation of Memorandum of Association: The next step is to prepare the MOA of the Company. If is the constitution of the company which defines the objects and slope of the companys activities and its relation with the outsi8de world. Preparation of Article of Association: It is the documents containing the rules and regulations relating to the internal management of the company. Printing, Signature and Stamping of MOA & AOA: The next step is to arrange for the printing signature and stamping of the memorandum and articles. Preparation of other Documents: Power of Attorney. Preliminary Agreements, if any Consent of the Directors in From No. 29 Particulars of the Directors in Form No. 32 Notice of Registered Address in form No. 18. Statutory Declaration.
6. Filling of Documents for Registration: The following documents are to be filled with the Registrar along with the registration fee for registering the company. MOA printed and duly signed. AOA printed and duly signed. Name availability letter received from the Registrar of Companies. Consent of the Directors in form NO. 29 Particulars of Directors in form No. 32. Notice of Registered Address in form No. 18. Power of Attorney empowering the attorney of the promoters. A declaration that all the requirements of the companies Act 1956 and the rules there to have been compiled with in respect of registration. 7) Certificate of Incorporation: When the requisite documents are filed with the Registrar, the Registrar shall satisfy himself that the statutory requirements regarding registration have been duly complied with. If the Registrar is satisfied as to the compliance of statutory requirement, he retains and registers the MOA, AOA and other documents filed with him and issues a Certificate of Incorporate i.e. of the formation of the company. A company comes into existence as a legal person upon the issue of the certificate of incorporation.
Q.36 MEMORANDUM OF ASSOCIATION: The MOA is the charter of the company and provides the foundation on which the structure of the company is built. It defines scope of the companys activities as well as its relation with the outside world. Definition: Sec 2(28) of the Companies Act defines a memorandum as, the MOA of a company as originally framed or as altered from time to time in pursuance of any previous Company Law or of this Act. Sec 13 of the Act specifies the content of the memorandum. The importance of MOA is that it lays down the ambit of the powers of the company, the area within which the company can operate and beyond which it cannot go. The MOA must be (a) Printed (b) divided into paragraphs, numbered consecutively and (c) signed by each subscriber. CONTENTS OF THE MEMORANDUM: a. Name Clause: The Memorandum of every company must state the name of the company with the word Limited as the last word of the name in case of Public Limited Company and with Private Limited as the last word of the name in case of Private Limited Company. b. Object Clause: The memorandum must include under this clause: The main objects of the company and objects incidental or ancillary to the main object. Any other object. The object clause lays down the scope of activities of the company and defined the extent of its power. c. Domicile or Situation Clause: This clause mentions the name of the state in which the registered office of the company is situated. This determines the jurisdiction of the Court and indicates the domicile and nationality or the company. d. Liability Clause: A Limited company has the liability of its member limited to the face values of the shares hold by them. Liability clause of MOA contains a clear statement to this effect. The effect of this clause is that no member can be held liable for debts of the company beyond the amount which he has agreed to contribute to the share capital of the company. Similarly, in case of company Limited by Guarantee, the liability of the members is limited to the amount of guarantee given by him. e. Capital Clause: In case of a limited company, having share capital, the Companies Act requires that the MOA shall state the amount of share capital with which the company is to be registered and the division thereof into shares of a fixed amount. [
Sec 13 (4) ]. This is the maximum share capital that he company is authorized by the memorandum to raise. Hence it is called as the authorized or nominal capital. f. Association Clause: Under this clause, the subscribers to the MOA express their assent to form a company and signify their agreement for that purpose.
3) Alternation of Object Clause: By Sec 17 (1) , the objects of the company may be altered by special resolution so as to enable the company. To carry on its business more economically or more efficiently.
To enlarge or change the local area of its operation. To restrict or abandon any of the objects specified in the Memorandum. To amalgamate with other company or body of persons. 4) Alternation of Liability Clause: A company limited by shares or guarantee cannot change its memorandum so as to impose any additional liability on the members or to compel them to buy additional shares of the company unless all the members agree in writing to such change. 5) Alteration of Capital Clause: The procedure for alteration of capital and the power to make such alterations are generally provided in the AOA of a company. If the power and procedure are not laid down in the article, the company must alter the articles by passing a special resolution. If so authorized by the article, a company may alter its share capital so as to: Increase the amount of share capital. Cancel the unissued capital. Convert all or any of its fully paid shares into stock and reconvert stock into share, etc.
The directors contracted with M/s. Riche to purchase a concession for laying a railway line in Belgium. The contract was ratified by a special resolution. Later, the contract was repudiated by the company on the ground of its being ultra vires and Riche brough on action on the ground of breach of contract. It was held by the House of Lords that he contract was ultra vires company so void ab inito. It was also held that, not even the assent of the whole body of shareholders can ratify such a contract, as the contract was ultra vires the objects clause.
Effects of Ultra Vires Transactions: If a company enters into transactions, which are ultra vires, it will have the following effects: 1. Injunction: Wherever a company goes beyond the scope of the object clause, any of its members can get an injunction from the court to restrain the company from under taking the ultra vires act. 2. Personal Liability of Directors: If the transaction is ultra vires, for instance, if the funds of the company are misapplied, the directors will be held personally liable. 3. Ultra Vires Contract: Contracts entered into by a company, which are ultra vires, are void ob initial and unenforceable. 4. Property Acquired Ultra Vires: If a company acquires any property under an ultra vires transaction, it has a right to hold the properly and protect it against damage by other persons. 5. Ultra Vires Torts: A Company is not liable for torts committed by its agent or employees in the course of ultra vires transactions.
CASE ROYAL BRITISH BANK VS TARQUAND The doctrine of Indoor Management was first propounded by lord Notherlyin the celebrated case Royal British Bank VS Tarquand (1856). The Directors of the Bank had issued a bond to Tarquand. The company was empowered by its Articles to issue bonds provided it was authorized by a resolution of the company in general meeting. In this case, no such resolution had been passed. In was held that Traquand could recover the amount of bond from the company on the ground that he was entitled to assume that the necessary resolutions had been passed by the company. Exceptions to the Doctrine of Indoor Management: No benefits under the doctrine of Indoor management can be claimed by the person under the following circumstances: Where a person dealing with the company has actual or constructive notice of any irregularity in the internal proceedings of the company. Where a person did not in fact consult the Memorandum and Article of the company and consequently did not act on knowledge of these documents. Where a person dealing with the company was negligent and had he not been negligent could have discovered the irregularity by proper enquiries, etc. Where a person dealing with the company relies upon a forget document or the act done by the company is void.
ELEMENTS OF A SALE, SALE CONTRACT AND GOODS A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. It thus includes both an actual 'sale' and an 'agreement to sell', which has been distinguished later. 'Goods' means every kind of movable property other than actionable claims and money; and includes stocks and shares, growing crops, grass and things attached to or forming part of the land, which are agreed to be served from land before sale, or under for contract of sale. A 'sale' must be distinguished from an 'agreement to sell' since the legal implications of the two terms are vastly different. A contract wherein, the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of property in the goods is to take place at a future time, or subject to some conditions,
thereafter to be fulfilled, it is called an agreement to sell. An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.
3) Where the seller has expressly reserved the right of resale in the contract. No notice to the buyer is required in that case. b) Where the property in the goods has not passed to the buyer Right of with holding Delivery -- Where the property in the goods has not passed to the buyer, the unpaid seller has the right to withhold delivery of the goods, which is similar to and co-extensive with his rights of lien and stoppage in transit which he would have had if the property had passed. Rights Against the Buyer Personally (Seller's Remedies Against buyer for Breach of Contract)-- Besides, the above rights against the goods, an unpaid seller has certain rights against the buyer personally. The seller enjoys the following rights in personam (also known as remedies for breach of contract). 1. Suit for Price -- When the property in the goods has passed to the buyer, and the buyer wrongfully neglects or refuses to pay the price, the seller is entitled to sue him for the price. Where under a contract of sale the price is payable on a certain day irrespective of delivery or passing of property, and the buyer refuses or neglects to pay on that day, the seller may sue him for the price. 2. Suit for Damages for Non-Acceptance -- Where the buyer wrongfully neglects or refuses to pay for the goods, the seller may sue him for damages for nonacceptance. 3. Suit for Damages for Repudiation of contract before date of delivery Where the buyer repudiates the contract before the date of delivery, the seller may adopt any of the following two courses of action, viz.a) The seller may treat the contact as rescinded and sue the buyer for damages. This is also known as 'damages for anticipatory breach'. The damages will be assessed according to the prices prevailing on the date of breach. b) The seller may treat the contract as subsisting and wait till the date of delivery. The contract remains open at the risk and for the benefit of both the parties. If the buyer subsequently chooses to perform there shall be no damages; otherwise he shall be liable to damages assessed according to the prices on the day stipulated for delivery. 4. Suit for Interest --The seller may recover interest or special damages whereby law interest or special damages may be recoverable.
such rate as it thinks fit on the amount of the price from the date on which the payment was made.
2.
3.
4.
To reject the goods when they are not of the description, quality or quantity as specified in the contract (Sec 37). To repudiate the contract when goods are delivered in installments without any agreement to that effects [ Sec. 38 (1)] To be informed by the seller, when the goods are to be sent by sea route, so that he may arrange for their insurance [Sec 39 (30] To have a reasonable opportunity to examine the goods for ascertaining whether they are in conformity with the contract. (sec. 41) To sue the seller for recovery of the price, if already paid, when the seller fails to deliver the goods.
2.
3.
To sue the seller for damages if the 7 seller wrongfully neglects or refuses to deliver the gods to the buyer ( sec 57) To sue the seller for specific 8 performance To sue the seller for damages for 9 breach of a warranty or for breach of a condition treated as breach of a warranty ( Sec 59) To sue the seller the damages for 10 anticipatory breach of contract ( Sec 60)
To accept delivery of the goods in installments and pay for them, in accordance with the contract. (Sec. 38 (2) To bear the risk of deterioration in the course of transit, when the goods are to be delivered at a place other than where they are sold ( sec 40) To inform the seller in case the buyer refuses to accept or rejects the goods ( sec 43) To take the delivery of the goods within a reasonable time after the seller tenders the delivery (Sec. 44) To pay the price, where the property in the goods are passed to the buyer, in accordance with the terms of the contract ( Sec 55) To pay damages for non-acceptance of goods ( Sec 56)
10
11
To sue the seller for interest where there is a breach of contract on the part of the seller and price has to be refunded to the buyer ( sec 61)
1.
2.
3. 4.
3. 4.
5.
5.
6.
6.
To pass an absolute and effective title to the goods, to the buyer. To deliver the goods in accordance with the terms of the contract ( sec 31) To ensure that the goods supplied conform to the implied / express conditions and warranties. To put the goods in a deliverable state and to deliver the goods as and when applied for by the buyer ( sec 35) To deliver the goods within the time specified in the contract or within a reasonable time and a reasonable hour. [ sec 36 (2) and (4)] To bear all expenses of and incidental to making a delivery (
has not passed to the buyer (sec 46 (2) 9 To sue the buyer for price when 9 the property in the goods has passed to the buyer or when the price is payment on a certain day, in terms of the contract, and the buyer fails to make the payment (sec 55) 10
i.e. upto the stage of putting the goods into a deliverable sate 0 (sec 36 (5) To deliver the goods in the agreed quantity. (Sec. 37 (1).
11
12
To deliver the goods in installments only when so desired by the buyer. (Sec 38 (1)) To arrange for insurance of the goods while they are in transmission or custody of the carrier. (Sec. 39 (2). To inform the buyer in time, when the goods are sent by a sea route, so that he may get the goods insured [Sec. 39 (3) ]
Q.51 Insurance
The aim of all insurance is to compensate the owner against loss arising from a variety of risks, which he anticipates, to his life, property and business. Insurance is mainly of two types: life insurance and general insurance. General insurance means Fire, Marine and Miscellaneous insurance which includes insurance against burglary or theft, fidelity guarantee, insurance for employer's liability, and insurance of motor vehicles, livestock and crops. The Insurance Act, 1972 and the General Insurance Business (Nationalization) Act, 1972 govern Fire and Marine Insurance, while the Indian Marine Insurance At, 1963 governs marine insurance in our country. These laws contain provisions relating to the constitution, management and winding up of insurance companies and the conduct of insurance business of all types. All insurance business in India has been nationalized. A Contract of insurance is a contract by which one party undertakes to make good the loss of another, in consideration of a sum of money, on the happening of a specified event, e.g. fire accident or death. Law recognizes insurance as a system of sharing risk too great to be borne by one individual.
Risk - In a contract of insurance the insurer undertakes to protect the insured from a specified loss and the insurer receive a premium for running the risk of such loss. Thus, risk must attach to a policy. Mitigation of Loss - In the event of some mishap to the insured property, the insured must take all necessary steps to mitigate or minimize the loss, just as any prudent person would do in those circumstances. If he does not do so, the insurer can avoid the payment of loss attributable to his negligence. But it must be remembered that though the insured is bound to do his best for his insurer, he is, not bound to do so at the risk of his life. Subrogation - The doctrine of subrogation is a corollary to the principle of indemnity and applies only to fire and marine insurance. According to it, when an insured has received full indemnity in respect of his loss, all rights and remedies which he has against third person will pass on to the insurer and will be exercised for his benefit until he (the insurer) recoups the amount he has paid under the policy. It must be clarified here that the insurer's right of subrogation arises only when he has paid for the loss for which he is liable under the policy and this right extend only to the rights and remedies available to the insured in respect of the thing to which the contract of insurance relates. Contribution - Where there are two or more insurance on one risk, the principle of contribution comes into play. The aim of contribution is to distribute the actual amount of loss among the different insurers who are liable for the same risk under different policies in respect of the same subject matter. Any one insurer may pay to the insured the full amount of the loss covered by the policy and then become entitled to contribution from his co-insurers in proportion to the amount which each has undertaken to pay in case of loss of the same subject-matter. In other words, the right of contribution arises when (I) there are different policies which relate to the same subject-matter (ii) the policies cover the same peril which caused the loss, and (iii) all the policies are in force at the time of the loss, and (iv) one of the insurers has paid to the insured more than his share of the loss.
RE-INSURANCE & DOUBLE INSURANCE Every insurer has a limit to the risk he can undertake. If a profitable proposal comes his way he may insure it even if the risk involved is beyond his capacity. Then, in order to
safeguard his own interest, he may insure the same risk, either wholly or partially, with other insurers, thereby spreading the risk. This is called -re-insurance. Re-insurance can be resorted to in all kinds of insurance and a contract of re-insurance is also a contract of indemnity. The re-insurers are liable to pay the amount to the original insurer only if the latter has paid to the insured. Re-insurance is subject to all the conditions in the original policy and the re-insurer is entitled to all the benefits, which the original insurer enjoys under the policy. When the insured insures the same risk with two or more independent insurers, and the total sum insured exceeds the value of the subject matter, the insured is, said to be over insured by double insurance. Both double insurance and over-insurance are perfectly lawful, unless the policy otherwise provides. A man may insure with as many insurers as he pleases and up to the full value of his interest with each one of them. If a loss occurs, he may claim payment from the insurers in such order as he thinks fit; but in no case he shall be entitled to recover more than his loss, because a contract of insurance is a contract of indemnity only.
It, however, does not cover loss of or damage to livestock, motor vehicles, pedal cycles, money, securities, stamps, bullion, deeds, bonds, bills of exchange, promissory notes, stock and share certificates, business books, manuscripts, documents, unset precious stones and jewelry and valuables. Average Clause - If the sum insured under this risk is less than 85% of the collective value of the property insured, the insured will bear a ratable proportion of the loss
b) Burglary and House breaking: The insurer will indemnity in respect of loss of or damage to the contents (except moneys and valuables) whilst contained in the insured premises by burglary and / or house - breaking. c) Money Insurance : the insurer will indemnify in respect of -i. ii. iii. Loss of insured 's money in transit between any two places within a radius of fifteen miles from he insured premises, Loss of money / valuables kept in safe steel cupboards/ cash box, etc. under lock and key, by burglary / housebreaking, and Loss of money from cashier's till and / or counter during business hours, following assault, violence against the insured or his employee.
d) Neon Sign / Glow sign: the insurer will indemnify in respect of loss of or damage to Neon sign / glow sign, by i. ii. iii. iv. Accidental external means, Fire, lightning or external explosion or theft, Riot, strike or malicious act, Floods, Inundation, storm, typhoon, hurricane, tornado or cyclone.
e) Personal Accident: If the insured (or any named partner, director of member of managerial staff or employee permanently working with the insured) aged between 16 and 65 years, sustain bodily injury solely and directly caused by accidental, violent, external and visible means resulting in death or disablement, the insurance company shall pay to the victim or his assignee / legal representative, the specified sum. f) Fidelity Guarantee: If the insured sustains direct pecuniary loss caused by act of fraud or dishonesty committed by any of his employees in the insured premises, the insurer will indemnify in respect of such loss.
g) Liability: The insurer will indemnify in respect of sums which the insured becomes legally liable to pay as i. Compensation and litigation expenses incurred by the insured , in connection with accidental death of or bodily injury to any person other than an employee, and / or accidental damage to property caused by or through the fault or negligence of the insured or his family member, Compensation to the insured employees under the Fatal Accident Act/ Workmen's compensation Act,
ii.
h) Business Interruption: The insurer undertakes to indemnify for losses arising out of business interruption i.e. cessation of normal commercial activity on account of or as a direct result of fire and allied perils (covered in clause "a" above)
2) FIRE POLICY "A" Under this policy the insurer undertakes to indemnify in respect of any loss of, or damage to, the property insured, caused by -a. Fire b. Lightning c. Explosion / Implosion excluding damage to boilers, economisers or other vessels in which steam is generated, d. Riot , strike and malicious damage, e. Impact damage by any rail/road vehicle or animal, f. Aircraft and other aerial and / or space devices and / or articles dropped there from, g. Storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation, h. Subsidence and landslide ( including rockslide) damage, i. Earthquakes fire and shock.
3) FIRE POLICY "B" This policy is similar to Fire Policy "A" and provides insurance from all risks enumerated therein except subsidence, landslide and earthquake. 4) CONTRACTOR'S ALL RISKS INSURANCE POLICY
This policy provides insurance against a. Loss, damage or destruction of property insured in a manner necessitating replacement or repair, b. Cost of clearance and removal of debris. The risks covered under the policy are I. Earthquake -- fire and shock, II. Landslide / Rockslide / Subsidence, III. Flood / Inundation, IV. Storm / Tempest/Hurricane /Typhoon /Cyclone, V. Collapse VI. Water damage in contracts involving work in rivers, canals, lakes or sea. c. Liability for accidental loss or damage caused property of other persons or for fatal or non-fatal injury to any person other than the insurer's own employees or the employees of the owner of the works or premises. d. Cost and expenses of litigation recovered by any claimant from the insured or incurred by the insured.
This policy covers the same risks as stated under "Motor Cycle / Scooter Insurance Policy' in respect of cars used solely for private or professional purposes. 6) COMMERCIAL VEHICLES INSURANCE B POLICY This policy covers the same risks as stated under "Motor Cycle / Scooter Insurance Policy', in respect of motor vehicles used for carrying goods. 7) PERSONAL ACCIDENT INSURANCE POLICY Under this policy the insurer pays the specified sum, if the insured sustains any bodily injury resulting solely and directly from accident caused by external violent and visible means.
CAUSA PROXIMA It is a rule of law that in actions on fire policies, full regard must be had to the causa proxima. If the proximate cause of the loss is fire, the loss is recoverable. If the cause is not fire but some other cause remotely connected with fire, it is not recoverable, unless specifically provided for. Fire risks do not cover damage by explosion, unless the explosion causes actual ignition, which spreads into fire. The cause of the fire is immaterial, unless it was the deliberate act of the insured. STEPS TO BE TAKEN IN FIRE INSURANCE CLAIMS
It is the duty of the insured, or any other person on his behalf, to give immediate notice of fire to the insurance company so that they can safeguard their interest, such as, deal with the salvage, judge the cause and nature of fire and assess the extent of loss caused by the fire. Failure to give notice may avoid the policy altogether. The insured is further required by the terms of the policy, to furnish within the specified time, full particulars of the extent of loss or damage, proof of the value of the property and if it is completely destroyed, proof of its existence. Delivery of all these details to the company is a condition precedent to the claim of the assured to recover the loss. If the assured prefers a fraudulent claim, whether for whole or part of the policy, he would forfeit all benefits under the
policy, whether or not there is a condition to this effect in the policy. Generally, the fraud consists in over -valuation, but over-valuation due to mistake is not fraudulent. In a majority of fire insurance claims, the expert assessors of the company are able to arrive at mutually acceptable valuation.
KINDS OF MARINE POLICIES The document containing the terms and conditions of the contract is called the Marine Policy. It must contain the names of the assured and the insurer or insurers. The subjectmatter insured and the risk covered the voyage or period of time or both and the sums insured. It must be duly signed by the insurer and stamped under the Stamp Act, 1899. The Marine Insurance Act deals with the following types of policies: Voyage Policy When the contract is to insure the subject matter at and from one place to another, the policy is called a "Voyage policy". In this case the risk attaches only when the ship starts on the voyage. Time Policy Where the subject -matter is insured for a definite period of time, it is called a "Time Policy. The ship may pursue any course it likes; the policy would cover all the risks from perils of the sea for the sated period of time. A time policy cannot be for a period exceeding one year, but it may contain a continuation clause. Mixed Policy It is a combination of voyage and time policies and covers the risk during particular voyage for a specified period of time. Valued Policy
It is a policy, which specifies the agreed value of the subject-matter insured. If there is no fraud or mis-representation, the value in a valued policy is conclusive as between the insurer and the insured, whether the loss is partial or total. Open or Un-valued Policy In this policy the value of the subject-matter insured is not specified. Subject to the limit of the sum assured, it leaves the value of the loss to be subsequently ascertained. Floating Policy The practice of taking out floating policies has come in vogue because of the difficulty of knowing by which ship or ships the goods are to be shipped. Such a policy therefore only mentions the amount for which the insurance is taken out and leaves the name of the ship(s) and other particulars to be defined by subsequent declarations. WARRANTIES A warranty in a contract of marine insurance is substantially the same as a condition in a contract of sale of goods. It gives the aggrieved party the right to avoid the contract. A warranty may be express or implied. These are discussed below in brief: Express warranties An express warranty is one, which is expressly stated in the policy of insurance it must be included in or written upon the policy. There is no limit to the number of express warranties, but those generally included in a marine policy are that the ship is seaworthy on a particular day, that the ship will sail on a specified day, that the ship will proceed to its destination without any deviation and that the ship is neutral and will remain so during the voyage. Implied Warranties Implied warranties are conditions not incorporated in a policy but assumed to have been included in the policy by law, custom or general agreement. These warranties are: a. Seaworthiness: A ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the sea or the adventure insured. This warranty attaches only up to the time of the sailing of the ship. In a time policy there is no implied warranty that the ship shall be seaworthy at any stage of the adventure. In a voyage policy where the voyage is to be performed in stage, the ship must be seaworthy at the commencement of each stage, it must be fit to encounter the ordinary perils of the part and if the voyage policy is on goods, it must be fit to carry the goods to the destinations contemplated by the policy: b. Legality of the Voyage: There is an implied warranty that the adventure insured is a lawful one and that the adventure shall be carried out in a lawful manner.
c. Non -deviation: The warranty that the ship shall not deviate from its prescribed. Usual or the customary route is also an implied warranty. The risk does not attach if the places of departure or destination of the ship are hanged, or if the ship takes the ports of call by an order different from the one mentioned in the policy. The insurers are discharged from his liability as from the time of deviation, and also if there is unreasonable delay are excused under certain circumstances.
ASSIGNMENT OF POLICY A marine policy is assignable by endorsement, or in any other customary manner, and the assignee can sue on it in his own name subject to any defence which would have been available against the person who affected the policy. The assignment may be made either before or after the loss, but an assured who has parted with or lost his interest in the subject-matter insured cannot assign.
Q. 56 Mortgage
A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgagemoney, and the instrument (if any) by which the transfer is effected is called a mortgagedeed. CREATION OF MORTGAGE Where the principle money secured is one hundred rupees or upwards, a mortgage otherwise than a mortgage by deposit by title deeds can be effected only by a registered instrument signed by the mortgagor and attested by at least two witnesses. When the principle money secured is less than one hundred rupees, mortgage may be effected either by a registered instrument signed by the mortgagor and attested as aforesaid, or (except in the case of a simple mortgage) by delivery of the property.
Q. 57 TYPES OF MORTGAGES
SIMPLE MORTGAGE Where, without delivering possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage-money, and agrees, expressly or impliedly that in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far
as may be necessary, in payment of the mortgage-money, the transaction is called a simple mortgage and the mortgagee a simple mortgagee. MORTGAGE BY CONDITIONAL SALE Where, the mortgagor ostensibly sells the mortgaged propertyi. ii. iii. On condition that on default of payment of the mortgage-money on a certain date the sale shall become absolute, or; On condition that on such payment being made the sale shall become void, or ; On condition that on such payment being made the buyer shall transfer the property to the seller,
The transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale: PROVIDED that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document, which effects or purports to effect the sale. USUFRUCTUARY MORTGAGE Where the mortgagor delivers possession, or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee and authorises him to retain such possession until payment of the mortgage money, and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lieu of interest or partly in payment of the mortgage money, partly in lieu of interest and partly in payment of the mortgage money, the transaction is called a usufructuary mortgage and the mortgagee a usufructuary mortgagee. ENGLISH MORTGAGE Where the mortgagor binds himself to repay the mortgage money on a certain date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage money as agreed, the transaction is called an English mortgage. ANOMALOUS MORTGAGE A mortgage which is not a simple mortgage, a mortgage by conditional sale, an usufructuary mortgage, an English mortgage or a mortgage by deposit of title deeds within the meaning of section 58 is called an anomalous mortgage.
IV. Rights to redeem separately or simultaneously A mortgagor who has executed two or more mortgages in favour of the same mortgagee shall, in the absence of a contract to the contrary, when the principal money of any two or more of the mortgages has become due, be entitled to redeem any one such mortgage separately or any two or more of such mortgages together. V. Right of usufructuary mortgagor to recover possession In the case of usufructuary mortgage, the mortgagor has a right to recover possession of the property together with the mortgage deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee. VI. Accession to mortgaged property Where mortgage property in possession of the mortgagee has during the continuance of the mortgage received any accession, the mortgagor upon redemption, shall, in the absence of a contract to the contrary, be entitled as against the mortgagee to such accession. VII. Improvements to mortgaged property Section 63A (1), Transfer of Property Act provides that where mortgaged property in possession of the mortgagee has during the continuance of the mortgage, been improved, the mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be entitled to the improvement and the mortgagor shall save only in cases provided for in sub-section (2) be liable to pay the cost thereof. VIII. Renewal of mortgaged lease Where the mortgaged property is a lease, and the mortgagee obtains a renewal of the lease, the mortgagor, upon redemption, shall in absence of a contract by him have the benefit of the new lease. IX. Mortgagors power to lease Section 65A(1), Transfer of Property Act provides that a mortgagor, while lawfully in possession of the mortgaged property, shall have power to make leases thereof which shall be binding on the mortgagee. X. Waste by mortgagor in possession A mortgagor in possession of the mortgaged property is not liable to the mortgagee for allowing the property to deteriorate; but he must not commit any act, which is destructive or permanently injurious thereto, if the security is insufficient or will be rendered insufficient by such act.
A security is insufficient, unless the value of the mortgaged property exceeds by onethird or, if consisting of buildings, exceeds by one-half the amount for the time being due on the mortgage.
III. Right of power of sale of mortgaged property, if any Section 69(1), Transfer of Property Act provides that the mortgagee, or any person acting on his behalf, subject to the provision of this section, have power to sell or concur in selling the mortgaged property, or any part thereof in default of payment of the mortgage money, without the intervention of the Court, in the following cases and in no others, namely: a. Where the mortgage is an English mortgage, and neither the mortgagor nor the mortgagee is a Hindu, Mohammedan or Buddhist, or a member of any other race, sect, tribe or class from time to time specified in this behalf, by the State Government in the Official Gazette; b. Where a power of sale without the intervention of the Court is expressly conferred on the mortgagee by the mortgage deed, and the mortgagee is the Government; c. Where a power of sale without the intervention of the Court is expressly conferrred on the mortgagee by the mortgage deed, and the mortgaged property or any part thereof, was on the date of the execution of the mortgage deed, situate within the towns of Calcutta, Madras, Bombay, or in any other town or area which the State Government may by notification in the Official Gazette, specify in this behalf. No such power shall be exercised unless and until a. notice in writing requiring payment of the principal money has been served on the mortgagor, or on one of several mortgagors, and default has been made in payment of the principal money or of part therof, for three months after such service or; b. some interest under the mortgage amounting at least to five hundred rupees, is in arrear and unpaid for three months after becoming due. IV. Right to appoint a receiver Section 69A, Transfer of Property Act provides that a mortgagee having the right to exercise a power of sale under section 69 shall, subject to the provisions of sub-section (2), be entitled to appoint by writing signed by him or on his behalf, a receiver of the income of the mortgaged property or any part thereof. V. Right to accession to mortgaged property If after the date of a mortgage, any accession is made to the mortgaged property, the mortgagee, in the absence of a contract to the contrary, shall for the purposes of the security, be entitled to such accession. VI. Right to the benefit of the renewed lease
Where the mortgaged property is a lease, and the mortgagor obtains a renewal of the lease, the mortgagee, in the absence of a contract to the contrary, shall for the purposes of the security be entitled to the new lease. VII. Right of mortgagee in possession A mortgagee may spend such money as is necessary. a. b. c. d. for the preservation of the mortgaged property from destruction, forfeiture or sale; for supporting the mortgagors title to the property; for making his own title thereto good against the mortgagor; and when the mortgaged property is a renewable leasehold, for the renewal of the lease,
And may, in the absence of a contract to the contrary, add such money to the principal money at the rate of interest payable on the principal, and, where no such rate is fixed, at the rate of nine percent per annum: VIII. Liabilities of mortgagee in possession Section 76, Transfer of property Act provides that when, during the continuance of the mortgage, the mortgagee takes possession of the mortgaged property: a. he must manage the property as a person of ordinary prudence would manage it if it were his own; b. he must use his best endeavors to collect the rents and profits thereof; c. he must, in the absence of a contract to the contrary, out of the income to the property, pay the Government revenue, all other charges of a public nature and all rent accruing due in respect thereof during such possession, and any arrears of rent in default of payment of which the property may be summarily sold; d. he must, in the absence of a contract to the contrary, make such necessary repairs of the property as he can pay for out of the rent and profits thereof after deduction from such rents and profits the payments mentioned in clause (c) and the interest on the principal money; e. he must not commit any act which is destructive or permanently injurious to the property; f. where he has insured the whole or any part of the property against loss or damage by fire, he must, in case of such loss or damage, apply any money which he actually receives under the policy, or so much thereof as may be necessary in reinstating the property, or, if the mortgagor so directs, in reduction of discharge of the mortgage money; g. he must keep clear, full and accurate accounts of all sums received and spent by him as mortgagee, and, at any time during the continuance of the mortgage, give the mortgagor, at his request and cost, true copies of such accounts and of the vouchers by which they are supported;
h. his receipts from the mortgaged property, or, where such property is personally occupied by him, a fair occupation rent in respect thereof, shall after deducting the expenses properly incurred for the management of the property and the collection of rents and profits and the other expenses mentioned in clauses (c) and (d) and interest thereon, be debited against him in reduction of the amount (if any), from time to time due to him on account of interest and , so far as such receipts exceed any interest due, in reduction or discharge of the mortgage money; the surplus, if any, shall be paid to the mortgagor; i. when the mortgagor tenders or deposits in a manner hereinafter provided, the amount for the time being due to on the mortgage, the mortgagee must, notwithstanding the provisions in the other clauses of this section, account for his receipts from the mortgaged property from the date of the tender, or from the earliest time when he could take such amount out of the Court, as the case may be, and shall not be entitled to deduct any amount therefrom on account of any expenses incurred after such date or time in connection with the mortgaged property. IX. Loss occasioned by his default If the mortgagee fails to perform any of the duties imposed upon him by this section, he may, when accounts are taken in pursuance of a decree made under this Chapter, be debited with the loss, if any, occasioned by such failure. X. Liability to bring one suit on several mortgages Section 67A, Transfer of Property Act provides that a mortgagee who holds two or more mortgages executed by the same mortgagor in respect of each of which he has a right to obtain the same kind of decree under section 67 and who sues to obtain such decree on any one of the mortgages, shall, in the absence of a contract to the contrary, be bound to sue on all the mortgages in respect of which the mortgage money has become due.
of the article would not constitute manufacture. Repairing or reconditioning does not constitute manufacture. Assembling would constitute manufacture.
assessable value; basic duty of Customs; surcharge; and additional duty of Customs leviable under section 3 of the Customs Tariff Act, 1975 (c.v.d.)
4. Additional duty of Customs at the rate of Re. 1/- per liter on imported motor spirit (petrol) and high speed diesel oil. 5. Anti-dumping duty/Safeguard duty for import to specified goods with a view to protecting domestic industry from unfair injury.